Kotak Mahindra Bank Raises Lending Rates, EMIs To Become Costlier

Kotak Mahindra Bank has increased the overnight K-MCLR to 8.25 per cent, as per the bank website while the rate for one month has been increased to 8.50 per cent.

Kotak Mahindra Bank has increased the overnight K-MCLR to 8.25 per cent

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Kotak Mahindra Bank on Thursday raised its lending rates by 5 basis points across tenures. The revised Marginal Cost of Funds based Lending Rates(K-MCLR) will be applicable from today ie 16 March.

The private lender has increased the overnight K-MCLR to 8.25 per cent, as per the bank website. Whereas, the rate for one month has been increased to 8.50 per cent. The MCLR for three months duration is set at 8.65 per cent and for six month tenure, the rate is fixed at 8.85 per cent. The bank has set the rate for one, two, and three year tenure at 9.05 per cent, 9.10 per cent, and 9.25 per cent. 

Kotak Mahindra Bank MCLR on various tenors

Overnight - 8.25%

One Month -8.50%

Three Month -8.65%

Six Month -8.85%

One Year -9.05%

Two year - 9.10%

Three year -9.25%

Last month, the bank revised its MCLR across all tenures after the Reserve Bank of India hiked the repo rate by 25 basis points (bps) in its latest monetary policy meeting. 

What's the Marginal Cost of Lending Rate?

Marginal Cost of Lending Rate is the minimum rate at which a bank is allowed to lend money to customers. The financial institution cannot lend money below that rate. The system was established by the Reserve Bank of India to provide minimum flooring on lending rates for different types of loans.

Apart from Kotak Mahindra Bank, several other banks have also raised their lending rates after the Reserve Bank of India announced the hike in benchmark policy rates.

The system-wide lending rates are set to shoot up by 100-150 bps next fiscal due to a sharp rise in banks' marginal cost of funds, according to a report by India Ratings. This will result in expediting the monetary policy transmission as the Reserve Bank has increased the policy rates by 250 bps since May last, the report added.

The lending rate increases will be mostly in the marginal cost of funds-based lending rate (MCLR) segment of the credit market, it said.